Have ASIC and APRA lost their objectivity?
Concerns ASIC and APRA were becoming increasingly politicised were brought to a head during the hearings into the Future of Financial Advice reforms.
Did the Australian Securities and Investments Commission (ASIC) intrude too far into the political sphere when it relayed the early, headline results of its most recent shadow shopping exercise to last month’s hearings of the Parliamentary Joint Committee reviewing the Future of Financial Advice (FOFA) bills?
This question was placed squarely before ASIC chairman Greg Medcraft when he appeared before a Senate Estimates Committee, and those who believe that either ASIC or its sister financial services regulator the Australian Prudential Regulation Authority (APRA) are simply unbiased policemen would have been disappointed.
The question was put to Medcraft by the Opposition’s Financial Services spokesman, Senator Mathias Cormann, who asked ASIC’s chairman: “…. whether you see your role as administering the regulatory framework – as being the regulator – or whether you see your role as being an active participant in policy debates”.
Medcraft’s answer was both direct and, for some observers, worrying, in the context of the impact the draft shadow shopping report had on the broader reputation of the financial planning industry.
“Our focus at ASIC is on our framework, which is making sure that investors are confident and informed, that markets are fair and efficient, and that registering and licensing is efficient and fair,” the ASIC chairman said.
“We use the tools at our disposal. Our role, and it is one of those tools, is to provide policy advice to government in the areas of our expertise. That is often what we do; that is our role. Policy is a matter for government and our role is to advise government in relation to policy.”
What Medcraft might properly have added is that ASIC, as a regulator, is a Commonwealth statutory authority and that its personnel ought to be largely governed by the same rules which apply to the Australian Public Service (APS).
And, indeed, if ASIC adheres to the same rules that apply to the APS, then the policy advice it provides to the Government ought to be frank, fearless and unbiased.
Which, in turn, ought to raise serious questions about the advisability and appropriateness of a regulator – tasked with providing frank, fearless and unbiased advice – conveying a draft shadow shopping report to a parliamentary committee in the midst of a heated political debate.
While, as Medcraft asserts, it is true that both ASIC and APRA have a role in providing policy advice, they should be doing so with respect to legal/technical questions rather than with a view to the broader sweep of social or political outcomes.
The financial services regulators ought to consider themselves on notice that amid the current political sensitivity surrounding financial services policy, their best recourse is to the professional objectivity demanded of good public servants.
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